Financial Analysis Essay

Financial Analysis Essay

1187 WordsApr 28th, 20125 Pages

Rachelle Stanley
Columbia College
FINC 350

A firm’s performance and financial situation is measured by financial ratios. In order to reach these ratios a financial analysis must be done on the company’s financial information. Financial analysis is the evaluation, selection and interpretation of financial data to assist in investment and financial decision-making. Financial data is drawn from many sources however, the primary source is data that is provided by the company in its annual reports. These annual reports consist of the income statement, the balance sheet and the statement of cash flows. Financial ratios can be used to analyze trends and compare the firm’s financial standing to those of other firms. Financial ratios are…show more content…

Any number 3 or above could mean that management has too much cash on hand and may be doing a poor job of finding ways to invest. By reading the annual report or the 10K you can see what executives plans are for future investments. A current ratio below 1 may be a sign that the company may have trouble paying its bills on time. Only companies that have inventory that can immediately be converted into cash should have a current ratio below 1.
Quick Ratio
The quick ratio, also known as acid test, is calculated by subtracting inventory from current assets divided by current liability. This ratio indicates a company’s ability to satisfy current liabilities with liquid assets. Current assets used in the quick ratio are cash, accounts receivable and notes receivable. Any quick ratio less than 1.00X would require the company to sell their inventory to meet its obligations. Lenders are very interested in quick ratio because inventory is not included, which is not converted to cash easily. USD IN MILLIONS | 2008-1 | 2009-1 | 2010-1 | 2011-1 | 2012-1 | Target

Introduction:
In this task you will prepare a presentation for the chief financial officer (CFO) to present to a bank vice president. The bank vice president will decide if the bank will approve a $1,000,000 funding request for the European expansion of Custom Snowboards Inc. currently under consideration. The bank has not confirmed it is willing to consider a $1,000,000 loan. The bank will make its assessment of the risk associated with the loan after your presentation.
You will prepare another…

Firm Performance: A Review of Financial Statements
Financial crises like dot-com bubble in the late 1990s and the housing market crash in the late 2000s prompted investors, and firms, to reconsider the criticality of financial discipline. Transparency would be necessary to entice investors to spend money again, thus a firm’s financial statements became their marketing tools. These examples reinforce the importance of financial statements’ relation to the financial wellbeing of a company. This…

In today’s day and age, there is a tremendous number of financial vehicles that each and every investor can place their money in. Investors place their money into each of these financial tools in order to make any sort of profit. Obviously, investors do whatever is in their power to make the largest profit possible. Bonds, stocks, and mutual funds are three of these many options for financial growth. Unfortunately, people that may have heard of these do not take advantage of them at all. Bonds, stocks…

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Apendix: Ratios of the Grand Hotel
Financial analysis
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Financial ratios are useful tool to analyze the firm performance and financial situation or to compare the firm’s financial situation with other. It will help managers or the board of director to make good decisions in their performance and future prospects. Financial ratios could be classified into five types: profitability, liquidity, financial leverage, asset turnover, and dividend policy ratios (Pauline…

well as lending and borrowing needs in an organization.
Managerial accounting provides financial data for an internal process which is mainly used by managers, executives and other governing boards of the organization (Buchbinder & Shanks, 2012, p. 184). Using the managerial accounting data, I utilize Chief Financial Officer (CFO) (is the one who is responsible for the entire financial management function of the organization) department, the controller (who is responsible for the accounting…

A. What financial tools described in this chapter can help you make better financial decisions?
Financial tools are means we use to show us our financial situation and where we can predict our financial situation to be in the future. Some of the financial tools to use are financial statements, assessments of risk and time value, and the budget process. Financial statements show us a formal record of financial activities. Components of a financial statement involve balance sheets, income statements…

Woolworth Financial Analysis
Financial statement analysis assists a business entity, business shareholders and other people interested, to analyze the figures in financial statements to present them with superior information about such most important factors for decision making and ultimate business survival. As exemplified by Gibson (2001), income statement, balance sheet, and cash flow statements project the financial performance a company at the present and probably the future. According to the…

An analysis was conducted on the financial statements of Custom Snowboards, Inc. for consideration of a 5-year-loan with our institution. Financial statement line items, risk assessments, and ratios were all examined with pertinent items that need to be considered are included in this report, and if granted the loan, can track the progress of the company’s ability to repay the loan.
The financial statement line items of Custom Snowboards, Inc. were analyzed focusing on areas that were influential…

Financial ratios make it easier for quantitative analysis, where financial information is analysed by investors, as the numerous numbers contained in a company financial statement can leave them confounded. There are five to six main types of financial ratios including liquidity measurement ratios, profitability indicator ratios, debt ratios, operating performance ratios and cash flow indicator ratios (Richard Loth, n.b and Jim Riley,n.b)1 and 2.
However, these can be grouped into two principal category…